For Hotels: RevPar and Arr Explained

How many hoteliers understand and make use of RevPar and Arr? What do they mean and how can they advantage a hotel in decision manufacture for time to come income increase and profitability?

Arr = midpoint Room Rate
RevPar = income Per available Room

Let us take an example of a 50 bedroom hotel which has sold 30 bedrooms at 100 per room, and has 20 rooms unsold.
The Arr is 100 x 30 = 3000 divided by 30 = 100 per room
The RevPar is 100 x 30 = 3000 divided by 50 = 60 per room

For Hotels: RevPar and Arr Explained

Two totally distinct figures. Arr just takes an midpoint of the rooms which have been sold. RevPar takes an midpoint of the rooms sold and the rooms unsold.

In looking for a trustworthy measure of how a hotel is performing on rates and revenue, Arr produces an inflated impression of the real figures, while RevPar gives a true photo of income achieved from accommodation available ie. Total capacity.

So how do hotels use this to their advantage? There a number of ways at looking at income generation eg.
(1) lower the rate and sell 50 rooms at 80 = 4000 with a RevPar of 80
(2) sell 30 rooms at 100 per room, then lower the rate to sell more rooms expanding the Total turnover and RevPar
The decision for hoteliers is how to use examine in their area, to flex rates, to match examine and rates to optimise occupancy and revenue, and to be looking to achieve the best RevPar they can.

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